Here's what Wikipedia says about added value (clearly not the same as value added):
'Market Value Added (MVA) is the difference between the current market value of a firm and the capital contributed by investors. If MVA is positive, the firm has added value. If it is negative, the firm has destroyed value. The amount of value added needs to be greater than the firm's investors could have achieved investing in the market portfolio, adjusted for the leverage (beta coefficient) of the firm relative to the market.'
Here's another one. In corporate finance, Economic Value Added or EVA is an estimate of true economic profit after making corrective adjustments to GAAP accounting, including deducting the opportunity cost of equity capital. Now those of us working for corporate America will get the significance of Generally Accepted Accounting Practice, where all beans are supposed to be the same size, whereas we know of course that they aren't.
Funnily enough there is no page titled 'Brand Value'. There is one about Brand Equity though. This refers to the marketing effects or outcomes that accrue to a product with its brand name compared with those that would accrue if the same product did not have the brand name.
And, at the root of these marketing effects is consumers' knowledge. In other words, consumers' knowledge about a brand makes consumers respond differently to the marketing of the brand. With me so far? Such study of brand equity is increasingly popular as some marketing researchers have decided that the 'brand value' is, for example, Coca-Cola's or Nike's single biggest asset.
Now, there are many ways to measure a brand and as WPP makes another effort to buy yet another massive research company, getting all the knowledge in one place to deliver a common language of measurement is a real battleground. It's being fought in boardrooms and planning sessions by media agencies and CRM people in agencies alike in search of the all purpose 'black box', predictive modelling crystal ball. Some of these CRM toolsets have been discredited as nice ideas but cripplingly expensive actually to get the data (I've always wanted to say 'crystal bollocks' in a meeting, haven't you?!) All of the major marketing research firms and media specific players, from Thinkbox to the Internet Advertising Bureau to the Newspaper Marketing Agency have strong views on this. Quite rightly, too, given the need to justify significant sums of money spent on these channels to deliver the magical 'Return on Investment'.
I remember being exercised by the most pertinent question ever asked by a client a few years back (from a well-known sports brand) who asked me this:
'It costs about the same to buy branded side panels at a football stadium as it does to make this microsite campaign, and the budget won't stretch to doing both. How can I decide which one to go for?' I argued at the time that most of the people at the match would know the brand name (as they would be wearing it or would have worn it) and the microsite campaign was actually promoting a specific new trainer with a link to the online store, so I'd put my money on that. We were doing the 'same' job for the brand, as the impressions were equivalent to three stadiums' worth, only delivering a speedier result to the bottom line. At the end of the day, the pitch wasn’t clickable, and therefore, as my argument went at the time, not measurable.
When it came to an argument about the money, we had our rulers and calculators out. It's not as if we talking about a fortune, either, but it summed up the big discussion still raging today. If it can't be measured, does that mean the benefit of doing it is immeasurable? At the time, there was a school of thought in digital agency land that TV advertising wasn't measurable (obviously we've all matured somewhat and realised that it is measured), and measurable, to a set of principles similar to U.S. GAAP legislation -- Generally Accepted Advertising Practice. One generally understood downside of GAAP, as any fool knows, is that it ignores an estimated $300 billion in shareholder opportunity costs. Perhaps this is where the challenges lie for media. If we didn't spend any money on brand advertising at all, for say, a year, what difference would it make? This discussion is hotting up as brands begin to plan their budgets for 'better value add' next year. Should we be on TV in 2009? Generally Accepted Advertising Practice tells us that we will, so stop being so silly.
Perhaps we are getting closer, in the clickable world, to the point where we can capture data and feed the black box machinery to see how campaigns and brands are doing. Everything that can be tagged, will be. Technology is actually reshaping the measurement industry, just as it is everything else in this industry, and it won’t be long before TV ads are tagged and adserved. This will fundamentally affect the rules and the rulers. We talk a good deal about the seismic shift in advertising, that is, the movement of consumer attention to non traditional media spaces. It's time to understand the impact of this on (however loosely defined) media value for brands and brand management.
The seismic shift in measurement is underway.
Alistair Duncan is CEO, MRM Worldwide.